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EXHIBIT 10.10
TRANSITION POWER PURCHASE AGREEMENT
(Hydro)
This Transition Power Purchase Agreement (the "Agreement) is entered into
as of this ______ day of ________________, 1999 between Niagara Mohawk Power
Corporation ("Niagara Mohawk"), a New York Corporation, and Erie Boulevard
Hydropower, L.P., a Delaware Limited Partnership ("Producer") (each individually
a "Party", or collectively the "Parties").
WHEREAS in November 1997 and on March 6, 1998 Niagara Mohawk filed its
Plan for Divestiture of its Non-Nuclear Electric Generating Facilities (the
"Plan") with the New York State Public Service Commission;
WHEREAS on May 6, 1998 the New York State Public Service Commission
approved the Plan subject to certain conditions;
WHEREAS Niagara Mohawk has conducted a Non-Nuclear Generation Divestiture
Auction ("Auction") to divest itself of its non-nuclear electrical generating
facilities, including seventy-two of its hydroelectric generating facilities;
WHEREAS Producer has entered into an agreement ("Asset Sales Agreement, or
ASA") to acquire certain facilities from Niagara Mohawk, consisting of the
hydroelectric generating facilities (the "Units") listed in the ASA;
WHEREAS Producer, will enter into an interconnection agreement with
NIAGARA MOHAWK on the Closing Date for the interconnection of the facilities
under this agreement; and
WHEREAS pursuant to the ASA Niagara Mohawk and Producer agreed to enter
into Transition Power Purchase Agreements pursuant to which, for a certain
period of time, Niagara Mohawk is to purchase from Producer certain quantities
of capacity and electricity generated by the Units;
NOW THEREFORE, in consideration of the mutual representations, covenants
and agreements set forth herein, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE 1.
DEFINITIONS
Whenever used in this Agreement with initial capitalization, the following
terms shall have the meanings specified or referred to in this Article 1.
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"Agreement" shall mean this Transition Power Purchase Agreement dated as
of _______________, 1999, between Niagara Mohawk Power Corporation and Erie
Boulevard Hydropower, L.P. and all attached schedules.
"Asset Sales Agreement" or "ASA" shall mean the Asset Sales Agreement
dated as of December 2, 1998, between Niagara Mohawk Power Corporation and Erie
Boulevard Hydropower, L.P.
"Business Day" shall mean any day other than Saturday, Sunday and any day
which is a legal holiday or a day on which baking institutions in New York City
are authorized by law or other governmental action to close; and a Business Day
shall open at 8:00 a.m. and close at 5:00 p.m. Eastern Standard (or Daylight)
time.
"Calendar Quarter" shall include four time periods, each of the calendar
months of (i) January, February, and March, (ii) April, May, and June, (iii)
July, August, and September, (iv) October, November, and December.
"Closing" shall mean the closing of the transactions contemplated by the
ASA.
"Closing Date" shall mean the date and time at which the Closing actually
occurs.
"Delivery Point" shall mean the point at which the interconnection
facility is connected to the transmission system as is indicated on a one-line
diagram included as part of Exhibit A of the Interconnection Agreement, or, as
provided herein, the interconnection facility between ▇▇▇▇ Street Generating
Station, L.P.'s electric generation facility in East Syracuse, New York and
Niagara Mohawk's transmission system.
"Force Majeure" means (with respect to Firm Transactions) an event not
anticipated as of the Effective Date which is not within the reasonable control
of the Party claiming Force Majeure (the "Claiming Party"), and which, by the
exercise of due diligence, the Claiming Party, is unable to overcome or avoid or
cause to be avoided. Force Majeure includes, but is not restricted to: acts of
God; fire; civil disturbance; labor dispute, labor or material shortage;
sabotage; action or restraint by court order to public or governmental authority
(so long as the Claiming Party has not applied for or assisted in the
application for, and has opposed where and to the extent reasonable, such
government action); provided, however, that an event of Force Majeure shall not
include (i) the loss of Niagara Mohawk's power markets; (ii) Niagara Mohawk's
inability economically to use or resell Power purchased hereunder, (iii) the
loss or failure of Producer's Power Supply; (iv) Producer's ability to sell
Power to a market at a more advantageous price. A party's year 2000 computer
compliance failure shall not constitute fore majeure.
"Good Utility Practice" shall mean any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with
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good business practices, reliability, safety and expedition. Good Utility
Practice is not intended to be limited to the optimum practice, method, or act,
to the exclusion of all others, but rather to be acceptable practices, methods,
or acts generally accepted in the region and consistently adhered to by Niagara
Mohawk. Good Utility Practices shall include, but not be limited to North
American Electric Reliability Council ("NERC") Criteria & Guidelines, Northeast
Power Coordinating Council ("NPCC") Criteria & Guidelines, New York State
Reliability Council ("NYSRC") if any, and New York Power Pool ("NYPP") criteria,
rules and standards, as they may be amended from time to time including the
rules, guidelines and criteria of any successor organization to the foregoing
entities.
"Interconnection Agreement" shall mean a separate Interconnection
Agreement dated as of the Closing Date between Niagara Mohawk Power Corporation
and Erie Boulevard Hydropower, L.P.
"Interest Rate" means, for any date, the interest equal to the prime rate
of Citibank as may from time to time be published in The Wall Street Journal
under "Money Rates".
"New York Independent System Operator" or NYISO" shall mean an
organization formed in accordance with orders of the Federal Energy Regulatory
Commission to administer the operation of the transmission system of New York
State, to provide equal access to the bulk power-transmission system and to
maintain the reliability of the transmission system of New York State.
"Off-Peak" means 11:00 p.m. until 7:00 a.m. on any Business Day and any
day other than a Business Day.
"On-Peak" means 7:00 a.m. until 11:00 p.m. on any Business Day.
"Power" means electric capacity as measured in MW or KW and/or energy as
measured in MWh or KWh. Energy purchased hereunder will include applicable
reserves (operating capacity), unless the Parties expressly agree otherwise.
"Price" means the price to be paid per unit as specified by Niagara Mohawk
to Producer for the purchase of Power, including the energy price, demand
charges, transmission charges and any other charges pursuant to Article 2.
"Quantity" means that quantity of Power that Producer agrees to make
available or sell and deliver, or cause to be delivered, to Niagara Mohawk, and
that Niagara Mohawk agrees to purchase and receive, or cause to be received,
from Producer pursuant to Article 3.
"Replacement Price" means the locational based marginal price as defined
by the NYISO for the load zone 'E' which includes Niagara Mohawk's Northern
Operating Region.
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"Scheduling" or "Schedule" means the acts of Producer, Niagara Mohawk
and/or their designated representatives, including each Party's Transmission
Providers, if applicable, of notifying, requesting and confirming to each other
the quantity and type of Power to be delivered on a given hour, day or days at a
specified Delivery Point.
"Transmission Providers" means the entity or entities transmitting or
transporting the Power on behalf of Producer or Niagara Mohawk from the Delivery
Point.
ARTICLE 2.
TRANSACTIONS
2.1. Term of Agreement. Term of Agreement will begin upon the Closing Date of
the ASA (the Effective Date) and will end on September 30, 2001.
2.2. Compensation. For each month during the term, Niagara Mohawk shall pay
Producer a Fixed Payment equal to one twelfth of the applicable Annual Fixed
Payment (as set forth in Schedule A), (one third of the applicable payment in
the first period set forth in Schedule A). For each Calendar Quarter during the
term, Niagara Mohawk shall pay Producer a Variable Payment calculated by
multiplying the applicable Variable Price (as set forth in Schedule A) by the
amount of energy delivered during the Calendar Quarter that is in excess of the
First Tier Quantity set forth in Schedule B for the applicable Calendar Quarter.
2.3 Compensation Adjustment. In the event Producer fails to deliver the First
Tier amount during any Calendar Quarter as set forth in Schedule B, Niagara
Mohawk shall reduce the Fixed Payment due by an amount of the product of (X) the
difference between the First Tier amount and the amount actually delivered (the
"Delivery Shortfall"), times (Y) the average Replacement Price for the
respective Calendar Quarter; provided, however, Producer shall have the option
to supply the Delivery Shortfall from ▇▇▇▇ Street Electric Generating Station,
L.P.'s electric generating facility in East Syracuse, New York, subject to the
limitations: (i) that On-peak deliveries in MWh are equal to Off peak deliveries
in MWh, (ii) Niagara Mohawk is physically capable of receiving such energy and
(iii) Producer agrees to pay any incremental transmission and distribution costs
incurred by Niagara Mohawk as a result of such deliveries. Niagara Mohawk shall
have the right to schedule any such make-up deliveries by Producer. Niagara
Mohawk shall not be entitled to any other relief due to Producer's failure to
deliver the First Tier amount during any Calender Quarter.
In the event Producer does not use Good Utility Practice and fails to
provide energy and ancillary services to Niagara Mohawk relative to historic
capability and operation of the Units, per Article 3.2, the Producer shall pay
Niagara Mohawk the product of (X) the difference between the actual energy and
ancillary services delivered to Niagara Mohawk and what would have been
delivered based upon historic capability,
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times (Y) the Replacement Price. Schedule C sets forth the historical energy
production shape of the Units for purposes of this Section 2.3.
Niagara Mohawk shall reimburse Producer for payments Producer incurs to
Niagara Mohawk for electric service under Niagara Mohawk's Service
Classification Tariff during hours in which Niagara Mohawk requests the Producer
to synchronize its generating Units without generating electricity ("Motor") to
provide voltage support. Producer shall provide such invoices to Niagara Mohawk
in accordance with Article 4.
2.4 Ancillary Service. Niagara Mohawk may request and Producer must commit
Unit(s) to be utilized for ancillary services to the NYISO. Producer may receive
ancillary service payments from the NYISO for such services, or for other
ancillary services it provides. Fixed Payments due from Niagara Mohawk to
Producer in accordance with paragraph 2.2 above shall be reduced by the amount
of all payments Producer receives from the NYISO for such services during the
applicable month. At the request of Niagara Mohawk, Producer must supply
supporting documentation illustrating such payments. Niagara Mohawk shall have
the right to audit Producer's payments from the NYISO.
2.5 Sell-All. Producer will sell and Niagara Mohawk will purchase all of the
electric capacity and all associated energy output and ancillary services of the
hydro generating Units operated by Producer. Niagara Mohawk shall have the right
to claim the capacity.
2.6 Delivery Point. Producer will make all of the capacity, energy, and
ancillary services of the Units available to Niagara Mohawk at the Delivery
Point.
2.7 Condemnation Adjustment. In the event that Producer ceases to own one of
the Units due to an action under the New York State Eminent Domain Procedure Law
or any other law governing acquisition by eminent domain, condemnation or other
taking by any public authority or any Person (collectively, "Condemnation"), (a)
the First Tier Quantities (Schedule B) shall be reduced by an amount equal to
the ten year average GWh produced at such Unit during each period multiplied by
0.776, and (b) the Annual Fixed Payment (Schedule A) shall be reduced by the
percentage that the ten year average GWh produced at such Unit represents in
relation to the ten year average GWh produced at all of the Units (including
such Unit). In the event that the Comdenation occurs during any period in
Schedule A or Schedule B, such schedules shall be adjusted on a pro rata basis
to reflect the remainder of such period.
ARTICLE 3.
SCHEDULING
3.1 Scheduling. Niagara Mohawk shall have the right during the term of the
Agreement to commit, schedule, and designate for dispatch (if the Unit is
capable of receiving base points from the NYISO) any and all of the Units.
Niagara Mohawk shall have the right to require Unit(s) be available for economic
dispatch for purposes of
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providing ancillary services to the NYISO and may rely on Unit(s) to provide
voltage support, load following, regulation, reserves, and other similar
ancillary services.
3.2 Scheduling. Niagara Mohawk shall provide to Producer, its projection of
hourly energy prices at least 10 Business Hours prior to the time the day ahead
bids and schedule requests are due to the NYISO. Business Hours shall mean the
hours between 8:00 AM and 5:00 PM (EST) Monday through Friday. Producer shall be
obligated to schedule the hydro Units, consistent with historic usage, including
weekends, to minimize to the extent possible (recognizing operating
constraints), the power costs, including ancillary services, of Niagara Mohawk.
This shall be completed on a timely basis, in accordance with Good Utility
Practice such that Niagara Mohawk shall have the schedule 4 Business Hours prior
to the day ahead bids and schedule requests to the NYISO. At the request of
Niagara Mohawk, Producer must provide documentation supporting the process used
to assure Producer has developed schedules, consistent with historical energy
production shape to minimize the production cost, including ancillary services,
of Niagara Mohawk. In the event Producer does not use Good Utility Practice and
fails to provide schedule consistent with historic usage, Niagara Mohawk shall
be compensated in accordance with Article 2.3.
3.3 Scheduling Updates. Niagara Mohawk and Producer shall update the schedule
at the request of NIAGARA MOHAWK to accommodate the "Balancing Market Evaluation
for the Real Time Market" described in the NYISO tariff filed with Federal
Energy Regulatory Commission.
ARTICLE 4.
PAYMENT
4.1 Payment. Producer shall provide Niagara Mohawk with an invoice setting
forth the quantity of power which was delivered to Niagara Mohawk, (unless
otherwise specified for any applicable Transaction(s)), during the preceding
month, the total amount due from Niagara Mohawk including any applicable
Variable Payment and Compensation Adjustment, net of ancillary service payments
received by Producer from the NYISO, and any applicable supporting
documentation. Niagara Mohawk shall remit the amount due by wire transfer, or as
otherwise agreed, pursuant to Producer's invoice instructions, on the later of
fifteen days from receipt of Producer's invoice or the twenty-fifth (25th) day
of the calendar month in which the invoice is rendered.
4.2 Overdue Payments. Overdue payments shall accrue interest at the Interest
Rate from, and including, the due date to, but excluding, the date of payment.
4.3 Billing Dispute. If Niagara Mohawk, in good faith, disputes an invoice,
Niagara Mohawk shall immediately notify Producer of the Basis for the dispute
and pay the portion of such statement conceded to be correct no later than the
due date. If any amount withheld under dispute by Niagara Mohawk is ultimately
determined (under the
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terms herein) to be due to Producer, it shall be paid within one (1) day of such
determination along with interest accrued at the Interest Rate until the date
paid. Inadvertent overpayments shall be returned by Producer upon request or
deducted by Producer from subsequent payments, with interest accrued at the
Interest Rate until the date paid or deducted.
ARTICLE 5.
FORCE MAJEURE
5.1 Performance Excused. If either Party is rendered unable by an event of
Force Majeure to carry out, in whole or part, its obligations under the
Agreement, then, for only the pendency of such Force Majeure, the Party affected
by the event (other than the obligation to make payments then due or becoming
due with respect to performance which occurred prior to the event) shall be
temporarily relieved of its obligations insofar as they are affected by Force
Majeure but for no longer period. The Party affected by an event of Force
Majeure shall provide the other Party with written notice setting forth the full
details thereof within two (2) business days after the occurrence of such event
and shall take all reasonable measures to mitigate or minimize the effects of
such event of Force Majeure; provided, however, that this provision shall not
require Producer to deliver, or Niagara Mohawk to receive, Power at points other
than the Delivery Point.
ARTICLE 6.
TITLE TRANSFER; LIABILITY
6.1 Title and Risk of Loss. Title to and risk of loss related to the Quantity
shall transfer from Producer to Niagara Mohawk at the Delivery Point. Producer
warrants that it will deliver to Niagara Mohawk the Quantity free and clear of
all liens, claims and encumbrances arising prior to the Delivery Point.
6.2 Indemnity. Each Party shall indemnify, defend and hold harmless the other
Party from any Claims arising from any act or incident occurring during the
period when control and title to Power is vested, as between the Parties as
provided in Article 7.1, in the indemnifying Party. "Claims" means all claims or
actions, threatened or filed and, whether groundless, false or fraudulent, that
directly or indirectly relate to the subject matter of an indemnity, and the
resulting losses, damages, expenses, attorneys' fees and court costs, whether
incurred by settlement or otherwise, and whether such claims or actions are
threatened or filed prior to or after the termination of this Agreement.
6.3 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages
and covenants and that it will use commercially reasonable efforts to minimize
any damages it may incur as a result of the other Party's performance or
non-performance of this Agreement.
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ARTICLE 7.
LAW
7.1 Governing Law and Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND DUTIES
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. Except as provided in Article 9.2, any law
suits arising under this AGREEMENT shall be instituted in the Federal or State
courts of New York located in the City of Syracuse and each party hereby
irrevocably submits to the in personam jurisdiction of such courts. Each party
herein waives its respective right to a jury trial with respect to any
litigation arising under or in connection with this Agreement or any
Transaction.
ARTICLE 8.
MISCELLANEOUS
8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is not materially different than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets of such Party; provided, however, that in each
such case, any such assignee shall agree to in writing be bound by the terms and
conditions hereof and creditworthiness is not materially different than that of
such Party.
8.2 Notices. Set for the in the:
TO NIAGARA MOHAWK:
NOTICES & CORRESPONDENCE INVOICES:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Niagara Mohawk Power Corporation
Vice-President Marketing and Planning Power Scheduling and Billing - HCB#3
Niagara Mohawk Power Corporation ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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SCHEDULING: CHECK PAYMENTS:
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(▇▇▇) ▇▇▇-▇▇▇▇ Niagara Mohawk Power Corporation
(▇▇▇) ▇▇▇-▇▇▇▇ Misc. Accounts Receivable C-3
Fax - (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
DISPATCHERS:
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(▇▇▇) ▇▇▇-▇▇▇▇ PAYMENTS BY WIRE:
(▇▇▇) ▇▇▇-▇▇▇▇ ----------------
Fax - (▇▇▇) ▇▇▇-▇▇▇▇
ABA Routing #: ▇▇▇▇▇▇▇▇▇
Citibank New York Credit To: Niagara Mohawk Power Corp.
Account #: ▇▇▇▇▇▇▇▇
TO PRODUCER:
-----------
NOTICES & CORRESPONDENCE: PAYMENTS:
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Erie Boulevard Hydropower, L.P
c/o Orion Power Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
----------------------
Fax:
----------------------
Phone: ▇▇▇-▇▇▇-▇▇▇▇
INVOICES:
--------
Attn: ABA Routing #
Fax No.: Confirmation:
(______)______-__________ Credit & Collections
Phone No.: (______) ______-_____________
(______)______-__________
SCHEDULING:
----------
Attn:
Fax No.:
(______)_________________
Phone No.:
(______)_________________
8.3 General. This Transition Power Agreement (including the Exhibit hereto) as
well as the ASA constitutes the entire Agreement between the Parties to the
subject matter contemplated by this Agreement. The Agreement shall be considered
for all purposes as prepared through the joint efforts of the Parties and shall
not be construed against one
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party or the other as a result of the preparation, substitution, submission or
other event of negotiation, drafting or execution hereof. No amendment or
modification to this Transition Power Agreement shall be enforceable unless
reduced to writing and executed by both Parties. This Transition Power Agreement
shall not impact any rights enforceable by any third party (other than a
permitted successor or assignee bound to this Agreement). No waiver by a Party
of any default by the other Party shall be construed as a waiver of any other
default. Any provision declared or rendered unlawful by any applicable court of
law or regulatory agency or deemed unlawful because of a statutory change will
not otherwise affect the remaining lawful obligations that arise under this
Agreement. The term "including" when used in this Agreement shall be by way of
example only and shall not be considered in any way to be in limitation. The
headings used herein are for convenience and reference purposes only. All
indemnity and audit rights shall survive the termination of this Agreement for
six years.
8.4 Audit. If requested, a Party shall provide to the other Party statements
evidencing the quantities of Power delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments thereof will be made promptly and shall bear
interest calculated at the Interest Rate from the date the overpayment or
underpayment was made until paid; provided, however, that no adjustment for any
statement or payment will be made unless objection to the accuracy thereof was
made prior to the lapse of one (1) year from the rendition thereof.
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The Parties have executed this Master Power Agreement in multiple
counterparts to be construed as one effective as of the Effective Date.
ERIE BOULEVARD HYDROPOWER, L.P. NIAGARA MOHAWK POWER CORPORATION
By: By:
Name: ▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Operating Officer Title: Vice President Marketing
and Planning
Date:
Date: